FAfl. 
S.  Af.'ER. 


The 

Economic  Future 
of  Mexico 


By  E.  VALLE  CAMBRE 


NATIONAL  THEATRE  IN  CONSTRUCTION  (Mexico) 

6  Million  expended  on  this  building;  an  amount  which  conld  have 
solve  the  Agrarian  problem  in  two  states. 


Published  by 

LATIN-AMERICAN  NEWS  ASSOCIATION 
1400  Broadway,  New  York  City 


Does  Mexico  Interest  You? 

Then  you  should  read  the  following  pamphlets: 

What  the  Catholic  Church  Has  Done  for  Mexico,  by  Doctor 

Paganel  . 

The  Agrarian  Law  of  Yucatan . 

The  Labor  Law  of  Yucatan . 

International  Labor  Forum . 

Intervene  in  Mexico,  Not  to  Make,  but  to  End  War,  urges 

Mr.  Hearst,  with  reply  by  Holland . 

The  President’s  Mexican  Policy,  by  F.  K.  Lane . 

The  Religious  Question  in  Mexico . 

A  Reconstructive  Policy  in  Mexico . 

Manifest  Destiny . 

What  of  Mexico . 

Speech  of  General  Alvarado . 

Many  Mexican  Problems . . 

Charges  Against  the  Diaz  Administration . . . 

Carranza  . > . . 

Stupenduous  Issues . 

Minister  of  the  Catholic  Cult . 

Star  of  Hope  for  Mexico . 

Land  Question  in  Mexico . 

Open  Letter  to  the  Editor  of  the  Chicago  Tribune,  Chicago,  Ill. 

How  We  Robbed  Mexico  in  1848,  by  Robert  H.  Howe . 

What  the  Mexican  Conference  Really  Means . 

/ 

The  Economic  Future  of  Mexico . 

We  also  mail  any  of  these  pamphlets  upon  receipt  of  5c  each. 


Address  all  communications  to 

LATIN-AMERICAN  NEWS  ASSOCIATION 
1400  Broadway,  New  York  City 


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1. 

LL  well-known  personalities  who  in  a  seri¬ 
ous  way  are  interested  in  the  painful  evo¬ 
lution  of  the  human  masses,  agree  that  the 
apparent  confusion  or  anarchy  which  pre¬ 
vails  at  present  in  Mexico,  presents  soci¬ 
ological  problems  as  important,  at  least,  as 
the  consideration  of  the  enormous  wealth  which  has  been 
destroyed  during  the  present  period  of  civil  strife. 

To  date,  the  interest  which  the  American  people  have 
taken  in  the  social  jfhenomena  which  have  developed  south 
of  the  Rio  Grande,  is  largely  of  an  ethical-sentimental  order. 
The  literature  published  on  the  subject,  is,  in  the  majority 
of  the  cases,  a  campaign  undertaken  by  political  parties 
against  one  another,  and  for  this  reason  the  illustrious  Dr. 
A.  Reppier  justly  exclaims:  ^ 

“SENTIMENT:  There  is  enough  of  it  in  the 
United  States  to  fill  our  own  orders,  to  stock  Europe, 
to  leave  a  surplus  for  Asia  and  Africa. 

“Candidates,  congressmen,  political  bosses,  ora¬ 
tors  upon  every  subject  under  heaven,  deal  with 
sentiment  to  the  exclusion  of  realities,  and  with 
fantasies  to  the  exclusion  of  facts!” 

The  interventionists  who  desire  intervention  merely  as  a 
speculation,  know  very  well  that  the  current  of  American 
sentimentalism, — showing  at  present  a  tendency  towards 


3 


the  respect  of  Mexican  sovereignty,  will  be  succeeded,  per¬ 
haps  to-morrow,  by  a  sentimentalism  of  another  kind,  one 
absolutely  opposed  to  the  former,  either  as  its  reaction,  or 
cunningly  provoked  by  means  of  an  active  propaganda. 
Consequently,  the  aspirations  of  such  interventionists  are, 
at  the  present  moment,  limited  to  a  desire  that  the  disorder 
in  Mexico  should  persist,  even  though  it  be  necessary  to 
foster  it  by  unscrupulous  methods;  and  they  particularly 
are  anxious  to  conceal  from  the  American  people  the  real 
causes  of  the  unrest  which  is  swaying  all  social  classes  in 
the  neighbor  republic. 

I  am  deeply  convinced  of  the  need  to  spread  amongst  the 
social  elements  which  lead  public  opinion  in  the  United 
States,  the  knowledge  of  the  real  motives  which  cause 
our  present  uneasiness,  as  I  consider  this  knowledge  the 
most  efficacious  means  to  prevent  a  disastrous  breach  in 
the  friendly  relations  of  two  countries  which  for  innumer¬ 
able  reasons  should  always  fraternize;  and  I  am  also  con¬ 
vinced  that,  in  order  to  spread  and  defend  a  high  spiritual 
ideal  (an  anti-interventionist  ideal),  it  is  necessary  to  bear 
in  mind  what  Fouillee  says,  that  the  relation  between  the 
material  interests  aiid  the  moral  qualities  of  a  people  is 
merely  one  of  the  many  applications  of  the  principle  of  the 
equivalents  of  forces,  which  permits  the  transformation  of 
these  material  advantages  into  elements  of  the  highest  mor¬ 
ality.  I  shall,  therefore,  apply  my  efforts  exclusively  to 
demonstrate:  first,  that  the  present  economic  situation  of 
Mexico  is  almost  the  only  cause  of  the  persistence  of  an 
abnormal  state  which  at  the  present  time  is  improperly 
designated  as  revolutionary  or  anarchic;  second,  that  this 
economic  condition,  “the  skeleton  in  the  closet”  of  all  our 
political  and  social  institutions,  is  a  legacy  of  all  previous 
governments  and  administrations;  and  third,  that  any  in¬ 
dependent  government  which  may  become  established  in 
the  Mexican  Republic,  will  find  itself,  in  its  effort  for  re¬ 
organization,  fatally  circumscribed  by  the  hopeless  “vicious 
circle”  which  foreign  capital  has  cunningly  built  through¬ 
out  the  republic,  as  a  result  of  the  concessions  it  has  ob¬ 
tained,  concessions  which  it  is  impossible  to  keep  in  force 
without  enduring  the  constant  threat  of  frequent  revolu¬ 
tionary  periods  of  increased  violence. 

The  Mexican  Revolution,  like  the  revolutions  which  have 


4 


taken  place  in  Europe,  in  the  United  States,  in  Japan,  and 
in  other  Latin-American  republics,  is  characterized  by  the 
free  manifestation  of  the  barbaric  instincts  which  in  a  poten¬ 
tial  condition  are  existant  in  all  societies  restrained  by  the 
influence  of  the  medium,  the  respect  to  tradition  and  the 
fear  of  law. 

The  populace,  as  it  always  happens  in  all  the  cases  when 
the  multitudes  assume  absolute  power,  has  fulfilled  a  role 
of  a  ferocious  and  unconscious  actor;  the  government  has 
offered  a  weak  opposition;  and  its  directors,  are  merely  the 
product  of  the  “historical  moment,”  either  succumbing  un¬ 
der  principle  supported  by  public  opinion — as  is  the  case 
of  Villa — or  melting  into  impersonal  elements  in  the  form 
of  directive  forces  constituting  the  “Administration.”  Any 
criticism  of  the  injustices  and  outrages  committed  by  the 
people  during  its  despotic  exercise  of  power,  is,  therefore, 
useless;  it  limits  itself  to  attribute  responsibility  to  any  par¬ 
ticular  group  or  political  leader. 

The  Revolution,  triumphing  over  the  feudal  system  es¬ 
tablished  in  the  country  since  the  time  of  the  Spanish  domi¬ 
nation,  found  itself,  as  was  natural,  threatened  by  the  army 
of  social  and  economic  problems  which  had  accumulated 
throughout  our  history,  and  which  were  considered  as  use¬ 
less  by  the  different  governments  which  have  ruled  the 
country  and  which  have  always  had  a  more  or  less  revolu¬ 
tionary-religious  origin.  Furthermore,  as  the  principal 
factors  of  those  problems  were  usually  the  general  economic 
uneasiness  and  the  hope  of  finding  a  satisfactory  solution 
to  this,  it  is  natural  that  any  government  of  transition  should 
give  preference  to  the  reconstruction  of  the  economic  back¬ 
bone  in  accordance  with  the  new  social  needs,  even  though 
employing  there  the  only  material  at  our  disposal,  and 
which,  as  I  have  said  before,  has  been  considered  useless. 

It  is  easily  explainable  that  the  individual  guaranties  and 
the  respect  of  property  should  not  have  been  effective  at 
the  time  of  triumph,  if  we  take  into  account  the  exceedingly 
radical  character  of  the  revolution  and  the  serious  menace 
of  a  new  revolt  within  the  heterogene  elements  which  have 
composed  it;  for,  it  is  impossible  to  expect,  within  a 
peremptory  period  of  time,  a  state  of  normal  morality  when 
the  army  is  merely  an  undisciplined  body  which  exacted 
and  persists  in  exacting  a  compensation  disproportionate  to 


5 


the  services  rendered.  In  this  case,  the  responsibility  which 
can  be  demanded  of  the  Revolution  is  similar  to  that  which 
could  be  demanded  of  a  convalescent. 

Recently  we  have  been  informed  that  the  greater  part  of 
the  confiscated  property  has  been  returned  to  its  owners; 
that  individual  guaranties  are  almost  effective,  and  that  the 
“de  facto”  government  is  taking  decided  steps  to  promote 
the  development  of  the  national  wealth.  Why,  then,  does 
the  press  inform  us  that  the  situation  in  Mexico  persists 
in  being  anarchical,  and  that  the  American  government 
finds  it  necessary  to  order  new  troops  to  the  border,  afraid, 
or  so  it  seems,  of  new  raids  similar  to  that  on  Columbus? 

The  persistence  of  the  abnormal  state  in  Mexico  is  due 
to  the  material  impossibility  of  solving  its  economic  situa¬ 
tion,  in  a  quick  or  drastic  manner.  The  call  which  Mr.  Car¬ 
ranza  sent  out  to  industrials  and  farmers,  that  they  con¬ 
tribute  with  their  respective  efforts  towards  the  re-estab¬ 
lishment  of  order,  has  been  answered  by  a  discouraging 
minority,  as  may  be  seen  by  the  following  estimates : 

In  normal  times,  the  yearly  production  in  Mexico  aver¬ 
ages  :  -  I 


Annual  Industrial  production . $230,000,000^00 

Annual  Agricultural  production .  170,000,000.00 


$400,000,000.00 

The  industrial  production,  at  present,  is  limited  to  min¬ 
erals,  oil,  and  electric  light  and  motive  power.  It  is  pos¬ 
sible  to  estimate  that  the  following  industries  are  paralyzed: 


Railways  . $50,000,000.00 

Wool,  yute  and  cotton  goods  and  expor¬ 
tation  of  cotton  (about  50%  of  produc¬ 
tion)  .  16,000,000.00 

Sugar  and  manufacture  of  alcohol  and 
alcoholic  drinks  (50%  of  production) .  7,500,000.00 

Paper  and  soap  industry .  1,500,000.00 

Electric  light  and  power .  1,800,000.00 

Coal  and  coke  industry .  6,000,000.00 

Fifty  per  cent.  (50%)  of  the  mining  in¬ 
dustries  paralyzed .  44,000,000.00 


Total  diminution  in  industrial  pro- 
^  duction  . $140,300,000.00 


6 


With  reference  to  agricultural  production, — even  accept¬ 
ing  the  data  furnished  by  the  Agricultural  chambers  as 
exact,  which  point  to  a  diminution  of  forty-two  per  cent. 
(42%),  the  remaining  58%,  estimated  in  corn  at  the  rate 
of  $50.00  (paper)  the  hectolitre  (about  250  lbs.)  represents 
ninety-eight  million  six  hundred  thousand  Dollars,  ($98,- 
600,000.00).  Consequently,  the  annual  production  is  as  fol¬ 
lows: 


Industrial  production .  $89,700,000.00 

Agricultural  production .  98,600,000.00 

Total  . $188,300,000.00 


that  is,  only  about  forty-seven  per  cent.  (47%)  of  the  normal 
production. 

With  a  normal  production  of  about  $400,000,000.00  per 
year,  the  Mexican  government  receipts  from  customs  dues, 
taxes,  railways,  lottery,  post  office  and  telegraph  tolls,  and 
other  taxes,  amounted  to  $72,978,000.00  (year  1914-15),  that 
is  about  18%  of  the  total  production.  Consequently,  and 
supposing  this  percentage  to  be  constant,  we  might  esti¬ 
mate  (being  unable  to  secure  at  the  present  time  accurate 
statistical  data)  that  the  receipts  amount  only  to  $33,846,- 
'  000.00  since  the  entries  on  account  of  lottery,  telegraph 
and  post  office  tolls,  although  collected  in  national  gold,  are 
not  very  important. 

If  we  do  not  take  into  account  the  payment  of  interest 
due  on  the  national  debts  (consolidated  and  floating,  which 
amounts  to  $45,000,000.00)  the  deficit  in  the  budget,  con¬ 
sidering  the  latter  similar  to  that  of  the  fiscal  year  of  1914-15, 
amounts  to  $45,262,000.00.  Consequently,  any  government 
that  may  establish  itself  in  Mexico,  having  a  revolutionary 
or  a  conservative  origin,  or  representing,  generally,  any  of 
the  numerous  political  and  socialist  parties  existing  in  the 
country  will  be  compelled,  unless  it  secures  a  foreign  loan, 
to  have  recourse  to  new  paper  issues,  a  monetary  commodity 
which  will  unavoidably  have  a  redeeming  power,  constantly 
on  the  wane. 

On  the  other  hand,  the  Mexican  people  are  fully  aware  that 
the  probability  of  securing  such  a  loan  (the  only  apparent 
.  remedy  to  an  increasingly  distressing  economic  situatioh) 
is  very  remote,  due  to  the  causes  which  I  shall  expound 
later;  and  unable  to  understand  fully  why  the  barest  neces- 


7 


sities  of  life  have  risen,  commanding  almost  prohibitive 
prices,  it  is  evident  that,  by  virtue  of  the  above  mentioned 
principle  of  the  equivalence  of  material  and  moral  interests, 
the  morality  of  the  people  must  decrease  fatally,  in  direct 
ratio  to  the  acquisitive  power  of  its  money,  and  to  its  efforts, 
whether  these  be  in  the  material  or  the  intellectual  order. 

Even  accepting  as  facts  the  numerous  imaginary  out¬ 
rages  which  are  being  committed  in  Mexico,  daily,  accord¬ 
ing  to  the  fantasy  of  the  press  interested  in  the  future  of 
the  millions  of  acres  acquired  by  Mr.  Hearst,  in  Mexico, 
at  a  laughable  price,  which  it  would  be  interesting  for  the 
American  people  to  learn,  we  must  meditate  seriously  on 
the  degree  of  responsibility  which  such  outrages  lay  on 
a  people  whose  working  class  earns  from  six  to  ten  cents 
per  day;  the  employees  of  the  government  and  of  private 
concerns,  earn  from  thirteen  to  seventeen  cents  per  day, 
and  where  transportation  service  is  so  irregular  that  even 
in  the  cities  of  a  certain  importance,  no  staple  articles  for 
the  bare  necessities  of  life  were  to  be  had  at  any  price, 
for  weeks.  The  cable  informs  us  of  the  disorders  that  are 
occurring  in  cities  of  the  old  world  due  to  the  lack  of  food, 
which  is  becoming  scarce  due  to  the  European  War;  the 
laboring  class  as  well  as  the  thinking  classes,  explain  the 
phenomenon  in  a  reasonable  way.  Well;  I  dare  any  one 
of  the  interventionists  to  investigate  the  attitude  of  the  people 
of  the  City  of  Mexico — our  most  populous  city — during  the 

week  of  Sept .  to  ....  1916,  during  which  the  city  had 

no  light,  water  or  police  service.  Engineer  Lorenzo  Her¬ 
nandez, — a  brother  to  Mr.  Rafael  L.  Hernandez  who  acted 
as  secretary  of  Fomento  and  Communications  during  the 
Madero  administration — related  to  me,  considering  it  as 
a  sociological  case  worthy  of  interest,  that  the  capital  pre¬ 
sented  the  interesting  spectacle  of  tranquility  during  which 
time  no  serious  robbery  or  any  other  outrage  occurred. 

If,  therefore,  a  people  which  can  behave  so  well,  and 
silently  bears  the  gnawing  torment  of  hunger,  in  the 
presence  of  the  threat  of  intervention,  is  not  worthy  of 
sympathy,  no  sympathy  is  deserved,  either,  by  the  people 
of  Belgium,  Polonia,  Serbia,  etc.,  nor  the  thousands  of 
families  who  suffered  heroically  during  the  Civil  War  of 
North  against  South  in  this  country,  and  who  never  de- 


8 


manded  that  England  should  intervene  for  the  settlement 
of  their  socio-political  difficulties. 

Resuming:  the  average  morality  of  the  poor  class  in 
Mexico  is  at  present  such  as  can  reasonably  be  expected 
from  a  family  composed  of  five  members,  and  compelled 
to  exist  in  a  condition  of  half-starvation,  at  the  rate  of  one 
cent  gold  per  day  for  each  member  of  the  family. 


9 


11. 


The  economic  history  of  Mexico  is  characterized  by  the 
increasing  depreciation  of  labor,  whether  it  be  of  the  in¬ 
tellectual,  the  physical  or  the  moral  variety.  Three  factors 
have  contributed  to  determine  this  exponent  of  our  civili¬ 
zation:  (a),  the  extensive  cultivation  of  land  and  the  abso¬ 
lute  impossibility  of  enriching  it;  (b),  restriction  of  free 
competition  in  social,  political  and  economic  matters;  and 
(c),  the  idiosyncracies  of  the  multiple  races  which  con¬ 
stitute  our  social  organization. 

(a) — Intensive  cultivation  in  Mexico  demands,  besides 
the  investment  of  an  enormous  amount  of  capital  for  ir¬ 
rigation  work,  A  MODERATE  RATE  OF  INTEREST  in 
order  that  the  settler,  when  acquiring  land  practically  by 
means  of  his  own  labor,  may  live  by  the  product  of  those 
lands,  and  fulfil  his  obligation  of  mortgage,  mortise  and 
interest,  charged  to  the  account  of  labor-capital  invested. 
Due  to  the  irregularity  and  permeability  of  the  subsoil  in 
the  regions  where  irrigation  works  are  more  indispensable, 
the  cost  of  these  works  is  very  high,  and  therefore  it  causes 
the  lands  that  can  be  worked  to  command  a  price  scarcely 
appealing  to  any  one  interested  in  intensive  cultivation. 
The  private  companies  which  have  attempted  to  carry  out 
this  kind  of  an  investment  have  failed  in  most  cases,  despite 
the  selection  that  they  made  of  agricultural  properties 
ideally  situated  and  endowed  with  lands  of  the  best  quality. 
We  could  cite  numberless  examples  of  this  kind,  where 
the  dividing  company  has  had  the  same  luck  as  the  one 
which  took  charge  of  the  division  of  the  beautiful  fertile 
“Chapingo”  property,  which  is  only  a  few  miles  distant 
from  the  City  of  Mexico.  But  I  will  cite  only  such  com¬ 
panies  which  on  account  of  their  magnitude  and  importance 
had  gained  the  decided  assistance  of  the  government,  by 
means  of  the  institution  called  “Caja  de  Prestamos  para  la 
Agricultura  y  Fomentode  la  Irrigacion”  (Loan  association 
for  the  promotion  of  Agriculture  and  Irrigation) .  The  prin¬ 
cipal  operations  carried  out  by  this  institution  since  its  es¬ 
tablishment  in  the  year  1908,  to  date,  are:  loan  of  three 
million  pesos  to  “Campania  Agricola  y  Ganadera  de  San 
Carlos;”  organization  of  the  “La  Sautena”  company,  with 
land  embracing  40,000  hectares;  and  the  concession  granted 


10 


to  Mr.  Manuel  Cuesta  Gallardo  for  carrying  out  the  drain¬ 
age  of  a  portion  of  Lake  Chapala.  These  enterprises  have 
been  offered  at  different  markets  in  the  United  States  with¬ 
out  any  success,  despite  the  advantageous  conditions  under 
which  they  have  been  offered.  The  above  mentioned  insti¬ 
tution,  the  only  one  existing  in  the  Republic  of  Mexico, 
has  been  unable,  to  date,  to  pay  a  single  dividend.  Un¬ 
doubtedly,  there  must  be  some  special  reason  which  has 
retarded  the  success  or  caused  the  failure  of  this  kind  of 
company  in  Mexico;  but  in  a  general  way  this  phenomenon 
may  be  interpreted  as  follows:'^ 

The  law  of  supply  and  demand,  implies  a  necessity  to  sell, 
face  to  face  to  another  necessity  to  purchase.  In  Mexico 
there  exists,  without  doubt,  the  desire  and  the  necessity  to 
purchase  lands  in  order  to  work  them  by  means  of  extensive 
cultivation,  since  the  popular  instinct  has  expressed  it  even 
withwiolent  manifestations,  which  have  sometimes  reached 
a  lamentable  extreme,  but  which  on  the  whole  are  impos¬ 
ing,  since  they  have  a  special  significance  both  for  the  legis¬ 
lator  and  for  the  sociologist.  Unhappily,  there  is  no  equiva¬ 
lent  necessity  to  sell  on  the  part  of  the  landholder,  who,  in 
the  majority  of  cases  secures,  through  the  extensive  culti¬ 
vation  of  his  lands,  what  he  requires  to  satisfy  his  dues  and 
the  needs  of  his  more  or  less  modest  mode  of  living.  His 
attachment  to  the  land  of  his  forefathers  does  not  permit 
him  to  understand  that  the  “hacienda”  on  which  he  lives 
is  slowly  converting  itself  into  the  cemetery  of  his  imaginary 
wealth.  Unable  to  fertilize  the  land,  restituting  to  it  the 
vigor  which  it  loses  year  by  year,  when  he  notices  the  dimi¬ 
nution  in  the  crops,  he  has  recourse  to  artificial  processes — 
real  marvels  of  ingenuity — intended  to  level  his  annual  in¬ 
come  which  decreases  alarmingly.  The  newly  installed 
textile  industries  and  the  exploitation  of  “gayule,”  “can- 
delilla,”  industrial  alcohol,  etc.,  flourishing  in  the  middle 
of  the  revolution,  are  classic  proofs  of  our  erring  agricultural 
tendencies,  which  seek  an  outlet  when  baffled  by  the  impossi¬ 
bility  of  remedying  the  empoverishment  of  the  land  which 
is  always  on  the  increase.  If  we  add  to  this  the  puerile 
hope  that  in  time,  the  natural  increase  in  the  price  of  his 
land  will  liberally  compensate  him  for  any  annual  losses, 
we  will  be  in  a  position  to  understand  clearly  why  the  land¬ 
holders  in  Mexico  do  not  experience  the  necessity  of  sell- 


11 


ing  as  is  experienced  by  the  manufacturer  who,  entertain¬ 
ing  no  ethical  sentimentality  for  his  products  and  depending 
essentially  on  their  sale,  is  compelled  to  offer  his  goods  until 
he  finds  a  suifable  demand  for  them.  When,  therefore,  the 
landholder,  for  special  reasons,  finally  makes  up  his  mind 
to  sell  his  property  in  plots  of  adequate  size  to  be  cultivated 
extensively,  he  demands  a  price  which  is  extravagant  for  the 
intelligent  colonizer,  and  which  causes  the  ruin  of  the  in¬ 
experienced  settler. 

When  there  is  an  offer  of  land,  hut  at  a  certain  arbitrary 
price,  although  the  terms  for  payment  may  be  ideal,  the 
economic  phenomenon  resolves  itself  into  a  case  of  a  sale 
at  a  long  term,  at  an  usurious  interest,  as  may  be  seen  by 
the  following  example: 

In  the  region  of  the  Bajio,  the  price  per  hectare —  two 
acres  and  a  half,  approximately — varies  from  $150  to  $300 
gold.  The  average  production  is  10  hectolitres  of  corn 
with  an  approximate  value  of  $15  gold,  at  the  rate  of  $1.50 
per  hectolitre.  The  expense  of  cultivation,  at  a  low  esti¬ 
mate  of  $0.20  gold,  per  day,  is  $8.50  gold;  therefore,  the 
profit,  theoretically  amounts  to  $6.50  gold  per  hectare,  since 
it  is  necessary  to  discount  interest  on  the  capital  invested. 
If,  then,  a  colonist  is  bound  to  pay  for  each  hectare  he 
acquires,  within  a  certain  term,  in  the  first  year: 

Interest  of  6%  per  annum  on  $150  gold-mini¬ 


mum  value  of  the  hectare .  $9.00  gold 

Mortise  at  4%  per  annum,  approximately.  . .  6.00  gold 

Total  . $15.00 


on  an  investment  which  pays  a  profit  of  $6.50,  it  is  evident 
that  he  pays  an  interest  of  $23.1%  on  the  real  value  of 
$65.00  gold,  which  theoretically,  is  the  highest  value  that 
should  be  attributed  to  the  hectare  of  workable  land.  For 
even  though  the  amount  of  $15.00  decreases  within  the  term 
fixed  until  it  becomes  zero,  the  owner  of  the  land  invests 
the  amounts  received  in  other  enterprises  which,  without 
effort,  on  his  part,  will  produce  the  initial  6%  on  each 
amount  of  $150  gold  per  hectare  gold. 

No  doubt  by  means  of  extensive  cultivation,  that  is,  by 
the  fertilizing  of  the  land,  its  production  would  be  higher 
than  $6.50  per  hectare,  but  the  increase  will  in  reality  be 
due  to  the  capital  invested  later  on,  in  the  form  of  intel- 


12 


lectual  and  material  work  which  the  agriculturist  applies  to 
his  modified  industry! 

As  the  product  of  the  land  diminishes  through  lack  of 
fertilizers,  the  owner  or  the  companies  employing  intensive 
cultivation,  are  unavoidably  compelled  to  pay  a  constantly 
decreasing  salary,  which  determines  a  constantly^  increasing 
offer  of  labor  to  the  mining  and  manufacturing  industries 
which  can  pay  better  salaries;  thus  bringing  about  a  fatally 
increasing  depreciation  of  labor,  painfully  aggravated  if  we 
take  into  account  the  increasing  cost  of  the  basis  of  living, 
caused  by  the  diminution  of  production  of  the  land. 

In  a  country  where  the  owner  of  the  land  marches  towards 
ruin  due  to  the  material  impossibility  of  fertilizing  his  land, 
where  the  poorer  classes  are  condemned  to  starve,  where  in¬ 
dustries  have  a  constantly  decreasing  demand,  and  where,  on 
the  other  hand,  the  people  observe  the  extraction  and  disposal 
abroad,  of  a  fabulous  wealth  in  the  form  of  minerals  and 
oils,  it  is  not  strange  that  the  people  become  demented  and 
seek  the  remedy  of  its  ills,  in  revolt. 

(B.) — As  my  object  is  to  study  the  Mexican  situation  from 
the  economic  point  exclusively,  I  shall  merely  point  out  an 
interesting  phenomenon  which  demonstrates  the  lack  of  free 
competition  in  socio-political  matters.  In  Mexico,  in  pub¬ 
lic  places,  one  may  imagine  the  following  notices,  which 
would  indicate  the  separation  of  classes,  as  in  the  South 
of  the  United  States  is  marked  the  division  between  white 
and  colored  people:  “Exclusively  for  the  aristocracy,”  “For 
workingmen,”  “For  Peons.”  When  the  transgressor  of  this  un¬ 
written  social  law  will  not  comply  with  the  remonstrances 
of  a  private  party,  the  police,  representing  the  government 
in  such  cases,  is  ready  to  punish  the  offense,  which  is  an 
offense  only  when  it  comes  from  the  lowly. 

The  dictatorship  of  General  Porfirio  Diaz,  was  organized 
as  all  dictatorships,  with  the  support  of  the  military  party 
and  the  approval  of  the  privileged  classes.  During  its  era 
of  apparent  wellbeing  and  thanks  to  the  construction  of 
railways  and  the  installation  of  new  industries,  the  demand 
for  labor  presented  a  glimpse  of  future  economic  equili¬ 
brium.  The  agricultural  question,  either  through  ignorance 
or  political  perversion,  set  aside  the  efforts  of  the  Public 
Finances  tendered  exclusively  to  the  development  of  in¬ 
dustries  which  was  limited  by  the  threat  of  a  proximate 


13 


period  of  lack  of  demand.  As  the  eighty-five  per  cent,  of 
our  rural  population  was  sentenced  to  starvation  or  to  in¬ 
crease  the  ills  of  the  working  and  domestic  classes  endanger¬ 
ing  these,  due  to  the  increasing  lowering  of  salaries  brought 
about  by  the  competition,  the  urban  class  in  its  turn,  tried 
to  scale  the  professional  and  bureaucratic  branches,  already 
too  full  in  relation  to  the  normal  national  demand.  On  the 
other  hand,  as  the  success  of  all  activities  in  Mexico  de¬ 
pends  on  the  more  or  less  active  sympathy  of  the  govern¬ 
ment,  all  compensated  service  became,  logically,  a  privilege. 
This  privilege  was  controlled,  not  only  by  the  statesmen 
who  were  in  a  position  to  handle  bureaucracy  at  their  will, 
but  due  to  the  fact  that  private  enterprises  had  to  count  on 
the  support  of  the  former,  all  activities  were  practically 
controlled  by  such  men.  Now,  when  man,  either  intuitively 
or  by  reasoning,  understands  that  his  activity,  in  what¬ 
ever  form  it  may  assume,  will  be  sterile,  for  lack  of  com¬ 
pensation,  his  ambition  sickens  or  dies  of  that  neurosis  char¬ 
acteristic  of  Mexico,  and  unjustly  symbolized  with  the 
phrase;  “The  country  of  to-morrow.”  I  say  “unjustly,” 
because  a  surprising  majority  of  the  workingmen  or  profes¬ 
sionals  who  have  emigrated  to  this  country,  despite  the  dif¬ 
ference  of  customs  and  the  handicap  of  language,  which 
constitute  a  serious  factor  toward  failure,  have  distinguished 
themselves  for  their  efficiency  and  capability. 

It  is  not,  therefore,  vices  of  race — as  someone  has  stated — 
that  is  the  cause  of  our  economic  uneasiness,  but  the  lack 
of  free  competition  in  the  economic  field,  which  prevents 
national  industry  from  developing,  for  there  is  no  competi¬ 
tion  possible  against  the  foreign  industries  established  in 
Mexico  by  virtue  of  concessions  so  excessive  as  to  be  anti- 
constitutional.  The  Revolution  could  not  have  invented 
such  an  economic  system,  laboriously  prepared,  but  brutally 
absurd.  If  the  Revolution  is  analyzed  dispassionately,  it 
will  be  seen  that  to  date,  it  has  restricted  itself  to  handle 
with  natural  timidity  our  rotten  skeleton,  the  only  asset  on 
which  it  can  count  for  the  national  improvement. 

(C.) — An  attempt  has  been  made  to  implant  different 
educational  systems  among  our  Indian  classes,  which  rep¬ 
resent  the  majority  of  our  social  organization.  To  date,  in 
the  majority  of  cases,  the  result  has  been  a  morality  in  the 
Indian  in  inverse  ratio  to  the  sum  total  of  knowledge  ac- 


14 


quired.  This  should  not  be  surprising:  in  his  ignorance, 
he  tries  to  stupify  himself  with  alcohol  in  order  to  appease 
the  hunger  which  torments  him,  more  intensely  than  our 
“cult”  theoreticians  can  imagine,  and  who  do  not  know, 
perhaps,  that  the  bandit-revolutionist  was  bred  from  starved 
alcoholic  parents,  (the  national  alcoholic  drink,  “pulque,” 
contains  a  certain  amount  of  cocaine  the  effect  of  which 
is  immediate,  a  fact  which  has  given  rise  to  the  erroneous 
belief  that  “pulque”  has  nutritious  properties).  When  our 
Indian  becomes  “kulturized” — borrowing  the  expression  of 
a  German  pedagogue,  there  happens  to  him  what  happened 
to  the  colored  hero  of  a  popular  American  novel  who,  placed 
in  the  category  of  a  free  man,  when  he  had  won  a  respect¬ 
able  social  position,  reniged  of  his  freedom  which  had  in¬ 
duced  him  to  dream  of  becoming  the  husband  of  his  young 
mistress  empoverished  when  she  granted  freedom  to  her 
slaves. 

Maliciously,  the  Indian  has  been  repeatedly  accused  of 
being  abject,  servile,  irredeemable.  The  Indian  has  at¬ 
tempted  to  revolt,  innumerable  times,  as  a  virile  protest 
against  his  inhuman  destiny.  In  all  cases,  the  law  has 
punished  him  with  prison  for  life  or  with  death.  Impotent 
in  an  unequal  struggle  of  the  bare  arm  against  the  fire¬ 
arm,  and  always  hungry,  The  Indian  has  sought  forgetful¬ 
ness  in  alcohol,  and  has  made  use  of  the  most  disgusting 
animals  as  food  to  satisfy  his  hunger,  thus  trying  to  solve 
his  economic  problem.  On  a  certain  occasion  an  American 
lady,  thinking  of  the  ruin  of  the  great  Mexican  family  which 
has  sought  refuge  in  this  country,  exclaimed:  “Is  it  not 
admirable,  how  the  Mexicans  endure  their  ruin  philosophi¬ 
cally?”— “yes,”  I  replied,  “thanks  to  the  Indian  blood  that 
runs  through  the  veins  of  practically  all  the  Mexicans.” 


III. 

We  have  stated  that  the  call  made  to  capital  by  the 
triumphing  Revolution  in  order  to  try  to  improve  the  eco¬ 
nomic  situation,  has  been  answered  only  by  a  discourag¬ 
ing  minority.  Consequently,  if  capital  persists  in  this  atti¬ 
tude,  the  government  of  Carranza  will  meet  with  a  con¬ 
stantly  increasing  deficit  which  no  doubt  will  provoke  a 
new  revolt  unless  the  government  finds  an  efficacious  in¬ 
terior  solution  to  the  problem.  This  solution  will  be  found 
without  fail,  if  American  public  opinion  opposes  the  armed 
intervention. 

That  new  revolt  would  also  belong  to  an  economic  order, 
since  it  would  be  the  result  of  an  absolute  lack  of  acquisi¬ 
tive  power  of  the  paper  money,  and  in  the  hope  that  a  new 
government  will  coin  gold  and  silver  coins,  from  the  metal 
obtained  by  the  gracious  and  spontaneous  cooperation  of 
the  mining  companies,  composed,  in  their  majority,  by 
foreigners. 

Before  all  we  must  warn  all  those  who  dream  with  coun¬ 
ter-revolutions,  that  the  latter  do  not  exist  in  the  sense  of 
acts  of  vengeance  or  punishment  against  the  disorders  com¬ 
mitted  during  a  previous  anarchical  state,  called  “revolu¬ 
tion.”  The  revolution  represents  the  conflict  of  psycological 
forces  liberated  by  the  rupture  of  the  ties  which  held  the 
passions,  the  brutal  instincts,  and  the  atavic  influences, 
in  a  potential  state  which  will  again  start  a  furious  conflict 
although  apparently  the  later  upheaval  might  be  apparently 
directed  to  punish  the  previous  trouble. 

Excluding  the  deliberately  perverted  ones,  I  sincerely  be¬ 
lieve  that  a  majority  of  the  revolutionary  chiefs  lament  the 
disorders  caused  by  the  Revolution  and  are  exerting  them¬ 
selves  to  remedy  them.  This  is  logical  for  two  reasons: 
first,  physically  and  morally  tired  of  a  brutal  struggle,  their 
instinct  of  conservation  pushes  them  towards  a  state  of  life 
wherein  they  can  safeguard  the  material  and  moral  rewards 
they  have  secured  during  the  campaign;  and  secondly,  the 
fearsome  spectacle  of  hunger,  daily  aggravated,  is  a  present¬ 
ment  of  the  future  when  they  would  be  the  first  victims. 

Supposing  that  another  Mexican  faction  became  armed 
through  the  support  of  the  Republican  party  triumphant  at 
the  next  polls,  we  would  see  repeated,  during  the  fight,  the 


16 


same  abuses,  the  same  savage  outrages,  and  probably  even  the 
same  “raids”  which  Mexicans  and  foreigners  have  witnessed, 
possessed  with  just  indignation.  The  new  mobs,  headed  by 
chieftains  psycologically  identical  to  those  who  warred  in 
the  past,  would  succeed  at  the  most,  in  supplanting  certain 
names  already  registered  now  in  that  kind  of  corpora¬ 
tion  called  government.  The  same  vicious  circle  which  we 
will  describe  presently,  would  place  them  in  the  same 
dangerous  situation  in  which  the  present  de  facto  govern¬ 
ment  finds  itself,  unless  it  limited  itself  exclusively  to  sell 
our  national  sovereignty  for  a  handful  of  gold. 

In  the  monography  published  by  the  “Mechanical  and 
Metals  Bank,”  called  “Mexico”  we  read:  “So  many  prob¬ 
lems  confront  Mexico  that  they  would  be  deeply  discourag¬ 
ing  were  it  not  for  the  fact  of  the  country’s  vast  natural 
wealth, — riches  which  require  peace  and  a  properly  ruled 
people  for  their  development!”  “Whatever  else  be  said 
one  thing  stands  out  definitely:  Mexico’s  financial  and  in¬ 
dustrial  hope  in  the  future  lies  with  the  bankers  and  financial 
interests  of  the  United  States.” 

No  one  can  foresee  what  the  organization  of  the  civilized 
world  finances  will  be  once  the  European  conflict  is  ended; 
but  it  is  probable  that  if  the  United  States  can  preserve  its 
peace,  the  association  of  the  most  important  American  banks 
will  rise  to  the  category  of  a  banking  institution  of  world¬ 
wide  repute.  Consequently,  without  entering  into  a  com¬ 
plicated  and  profound  analysis  of  the  statement  of  the 
Mechanical  and  Metals  Bank,  we  will  accept  it  as  an  irre¬ 
futable  truth,  or  at  least  as  an  indication  of  the  way  Amer¬ 
ican  capital  feels  in  regard  to  Mexico’s  economic  future. 

No  great  exertion  is  necessary  to  understand  the  attitude 
assumed  by  capital  towards  the  Revolution  and  the  de  facto 
government.  Its  protest  against  an  anarchical  state,  is  just, 
although  such  protest  is  similar  to  the  one  made  by  a 
farmer  against  heaven  because  the  latter  does  not  send  an 
opportune  rain.  Though  the  illogical  campaign  that  capi¬ 
tal  is  waging  against  acts  of  Mr.  Carranza — acts  which  in 
a  last  analysis  are  merely  the  natural  process  of  a  Revo¬ 
lution  transforming  itself  into  a  government — there  is  a 
large  amount  of  perfidy,  but  a  still  larger  amount  of  inex¬ 
plicable  ignorance.  What  are  the  final  pretensions  of  the 
Mexican  people?  To  witness  the  wonderful  spectacle  of  the 


17 


extraction  of  its  riches  for  the  exclusive  benefit  of  foreign¬ 
ers,  and  to  entertain  the  hope  that  at  last,  some  day,  it  be 
able  to  relieve  the  condition  of  practical  starvation  which 
tortures  it  from  its  sociologic  origin  to  date.  This  relief  can 
be  obtained  only  when  the  landholder  pays  the  tax  justly 
imposed  on  him;  when  foreign  companies  operating  in  Mex¬ 
ico,  agree  to  a  revision  of  their  concessions,  which  for  the 
the  greater  part,  are  anti-constitutional. 

Any  government  which  establishes  itself  in  Mexico  will 
have  to  deal:  on  the  one  hand  with  a  people  whose  morality 
is  the  psycological  concomitant  of  the  endemic  state  of  star¬ 
vation  that  afflicts  it;  and  on  the  other,  with  the  exigencies 
of  foreign  capital  which  will  not  consent  to  the  organization 
of  a  new  loan  for  Mexico  unless  the  Mexican  government 
that  seeks  such  loan  guarantees  to  that  capital  the  conces¬ 
sions  as  granted  by  previous  governments.  As  these  con¬ 
cessions  even  granting  that  they  were  demanded  and  granted 
in  good  faith,  are  notoriously  anti-constitutional  and  im¬ 
moral,  it  stands  to  reason  that  the  absolute  future  of  Mex¬ 
ico  depends  on  Wall  Street,  if  the  American  public  opinion 
does  not  oppose  the  injustice  of  an  armed  intervention. 

When  foreign  capital  is  persuaded  that  the  American  peo¬ 
ple  will  not  be  pleased  to  have  a  war  against  Mexico  merely 
because  it  so  suits  the  foreign  companies  operating  therein, 
we  will  witness  a  curious  spectacle:  the  Mexican  loan  con¬ 
sidered  at  the  present  moment  as  the  most  stupid  of  in¬ 
vestments,  will  be  even  overpaid  within  a  period  similar  to 
that  needed  for  covering  the  recent  European  loans. 

It  is  not  foolish  to  make  such  a  prediction,  for  in  the 
history  of  our  national  debts  is  seen  that  we  have  never 
repudiated  any  obligations,  however  contracted.  In  the 
“Journal  of  American  Bankers  Association”  (May  1916), 
we  read,  in  the  article  published  by  Mr.  T.  W.  Osterheld, 
the  following  “Throughout  the  history  of  Mexico,  its  strug¬ 
gles,  its  civil  strife  and  revolutions,  one  dominant  factor  has 
become  an  empiric  law  of  that  Republic,  namely:  never  to 
repudiate  its  material  debt  and  the  insistence  by  the  central 
government,  that  each  state  fulfill  the  obligations  which  it 
may  have  contracted.  The  great  proof  of  this  statement 
and  the  integrity  of  the  Mexican  Republic  will  be  found  in 
the  history  of  its  first  two  loans,  where  the  republic,  in  as¬ 
suming  the  responsibility  of  the  Spanish  debt,  received 


18 


eleven  million  dollars  for  a  thirty  million  loan,  paid  twenty- 
nine  million  five  hundred  thousand  dollars,  and  finally  ex¬ 
tinguished  this  debt  by  the  payment  of  over  sixty-two  mil¬ 
lion  dollars.  If  it  is  true,  as  Lord  Beaconsfield  states,  that 
character  is  destiny  in  the  individual,  then  the  past  actions 
and  work  of  the  Mexican  units  will  give  to  that  nation  a 
future  destiny  of  prosperity  and  progress  as  great  as  that  of 
any  nation  of  our  continent;  moreover,  it  is  unnecessary  to 
feel  any  repudiation  of  debt  of  interest  contracted  by  her 
past,  present  or  future  executives  ” 

Simultaneously  with  this  fact,  we  will  see  that  certain  press 
in  the  pay  of  the  capital  interested  in  Mexico,  cease  to  pub¬ 
lish  the  insults  which  it  has  been  hurling  at  the  Mexican 
revolutionary  people,  and  we  shall  also  see  the  definite 
cessation  of  “new  raids”  which  at  present  are  constantly 
threatening  the  American  frontier. 

New  York,  October,  1916. 


19 


